Logo of Phnom Penh Post newspaper Phnom Penh Post - NBC halts interest payouts on reserves of Kingdom’s banks

NBC halts interest payouts on reserves of Kingdom’s banks

Content image - Phnom Penh Post
The head office of the National Bank of Cambodia in Phnom Penh. Vireak Mai

NBC halts interest payouts on reserves of Kingdom’s banks

The National Bank of Cambodia has announced that it will stop offering interest payments to banks in the Kingdom for their currency reserves. Banking sector leaders say the move will not alter current business models.

While the decision to cut off interest payments from the central bank to commercial firms could see revenues fall, many in the industry say the interest they earn is just a small fraction of profits.

A message on September 4 from NBC governor Chea Chanto said the central bank’s committee for monetary policy decided to end the interest payments.

However, the announcement did not provide details on how the decision came about or what the interest rate had been.

‘Look after customers’

Currently, reserve requirements for lenders stand at 12.5 and eight per cent for foreign and domestic currencies, respectively.

The NBC previously paid out an interest of 4.5 per cent of the total reserves for foreign currency. No interest was paid for reserves in riel.

President and group managing director of Acleda Bank, In Channy, said the decision wouldn’t impact the bank’s operation because revenue from the interest is very small.

“The interest rate revenue on the reserve requirement was very small, so there will be no impact on the bank’s operations,” he said, adding that all the institution’s consumer-facing rates will stay the same.

“[The move] could make some banks consider lower interest rates on deposits, but I don’t think anyone will do this because there are more banks and more competition, so everyone needs to look after their customers.”

Cambodia Microfinance Association (CMA) chairman Kea Borann said on Sunday that the NBC’s decision to end interest payments on reserves will not substantially change the banking industry’s income.

“I think it will encourage banks to look at sources of funding within Cambodia. Therefore, banks may try harder to mobilise deposits and possibly issue corporate bonds,” he said.

MOST VIEWED

  • ‘Education’ a priority traffic-law penalty

    A top National Police official on June 21 neither rejected nor confirmed the authenticity of a leaked audio message, which has gone viral on social media, on a waiver of fines for a number of road traffic-related offences. General Him Yan, deputy National Police chief in

  • Siem Reap’s $18M zoo said to educate public, help wildlife

    Angkor Wildlife and Aquarium Co Ltd has invested $18 million in a zoo in Siem Reap province, which will be opened in October to educate and promote animal conservation as well as attract national and international tourists. Currently, the Angkor Wildlife and Aquarium is building the

  • Volunteer scheme to foster ‘virtuous’ humanitarian spirit

    A senior education official said volunteer work contributes to solidarity and promotes a virtuous humanitarian spirit among the youth and communities. Serei Chumneas, undersecretary of state at the Ministry of Education, Youth and Sport, made the comment during the opening of a training programme called “

  • Chinese firms unveil preliminary results on metro, monorail for capital

    Minister of Public Works and Transport Sun Chanthol and representatives from China Road and Bridge Corp (CRBC) and its parent company, the state-owned China Communications Construction Co Ltd (CCCC), met on June 24 for talks on results of the firms’ preliminary study on a potential metro

  • Nestle’s debut may spur dairy market

    Leading confectionery manufacturer Nestle plans to invest in Cambodia by setting up an operation in the near future, a move majorly hailed by local dairy farmers as a means of boosting the fresh milk market in the Kingdom. During a visit by a delegation led

  • ACLEDA, WU to enable global money transfers

    Cambodia's largest commercial bank by total assets ACLEDA Bank Plc and global money transfer firm Western Union (WU) have partnered to offer customers cross-border money transfers to 200 countries via “ACLEDA mobile” app. In Channy, president and group managing director of ACLEDA, said the June 22 agreement